Verizon will still buy Yahoo in light of data hackings

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    Yahoo might have its flaws, but Verizon will still try and make it work for the two of them. The two companies announced an updated acquisition agreement on Tuesday in light of Yahoo’s admission late last year their user data had been hacked twice. The revised deal shaves off $350 million from the original price.

    Verizon’s originally agreed to purchase Yahoo at $4.8 billion. But after Yahoo confirmed not one but two hacking incidents affecting more than a billion users, Verizon understandably wanted to take a pause and renegotiate the terms.

    Last week, Bloomberg reported Verizon would likely shave off $250 million off the price, so the final price cut landing at a $4.48 billion deal didn’t come as much of a surprise. And we got to hear a huge sigh of relief coming out of Yahoo’s headquarters over the fact that Verizon still wants them.

    “The amended terms of the agreement provide a fair and favorable outcome for shareholders. It provides protections for both sides and delivers a clear path to close the transaction in the second quarter,” said Marni Walden, Verizon executive vice president and president of Product Innovation and New Businesses, in a statement.

    In the new agreement, the two companies lay out how they will split the bill for lawsuits and liabilities resulting from the data breaches. Yahoo and Verizon will equally pay 50 percent of any cash liabilities incurred from non-Securities and Exchange Commission (SEC) government investigations and third-party litigation after the closing.

    After the close of the deal, what’s left of Yahoo will be renamed Altaba and it will take sole responsibility for any shareholder lawsuits and ongoing SEC investigations (the SEC is currently investigating whether Yahoo should have reported its data breaches to investors sooner). This will potentially lower the nearly $40 billion market cap value of the leftover company – a holding firm mostly overseeing stakes in Yahoo Japan and Alibaba. So it’s probably not great news to investors who’ve been waiting to unlock the value of Yahoo’s Asian assets for years.

    On the bright side, the data breaches will “no longer be taken into account in determining whether a ‘Business Material Adverse Effect’ has occurred or whether certain closing conditions have been satisfied.” In plain speak, this means Yahoo is no longer on the hook for proving those breaches didn’t have a material or adverse effect that would have jeopardized the deal.

    So the revised agreement is great news all around for two parties that really wanted to see this deal happen. Yahoo had a lot to lose had this acquisition fallen through. And there was no hiding Verizon’s ambitions to combine the one-time internet darling with AOL to create a massive digital advertising and distribution network.

    “We have always believed this acquisition makes strategic sense,” said Walden. “We look forward to moving ahead expeditiously so that we can quickly welcome Yahoo’s tremendous talent and assets into our expanding portfolio in the digital advertising space.”

    Kelly Paik
    Kelly Paik writes about science and technology for Fanvive. When she's not catching up on the latest innovations, she uses her free-time painting and roaming to places with languages she can't speak. Because she rather enjoys fumbling through cities and picking things on the menu through a process of eeny meeny miny moe.